Reversal strategies as the games begin
Kevin Haggerty is a full-time professional trader who was
head of trading for Fidelity Capital Markets for seven years. Would you like
Kevin to alert you of opportunities in stocks, the SPYs, QQQQs (and
more) for the next day’s trading?
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The
April 17 commentary should be read again, as it could very well be the same
as today’s commentary following yesterday’s volatility and knee-jerk reaction.
Crude oil hit $71, $US heads south as the FXE (EUR/$US) ETF hits new highs,
closing at 123.35, taking out the 01/23/06 123.19 high. The FXE was 118.65 on
2/27/06.
Earnings season is underway and the spin is, as always, "better than expected"
in addition to jumping all over some regional Fed comments about the token rate
increases ending. Of course they don’t tell you that better than expected in
many cases is above significantly lowered forecasts. Just last week, some of the
same source of Fed comments were that the economy was roaring along and that the
Fed would do what is necessary to control inflation. Amazing what a week does,
huh? Measured in the real world, the inflation is obviously accelerating, but in
the government statistics spin of PPI and CPI etc., it is "tame." The reality is
the economy has been slowing and the consumer pulling back out of necessity. The
last thing we need is high inflation and low growth.
The volatility and knee-jerk reactions were anticipated this week and that is what
traders thrive on. The SPX opened up and went trend-up all day, as did many of
the commodity-related stocks and semiconductors, which are and have been our
primary focus. There were many
Slim Jims and
First Consolidation Breakout setups across the board in all sectors, so
there was plenty to do for daytraders. The major acceleration yesterday came
once again in the Noon hour with the programs accelerating the market and the
SPX closing at 1307.04, +1.74%. The Dow was +1.7% to 11,267 and QQQQ +1.9% to
42.46. The SMH led the sector/groups at +3.4%, but most all of the primary
sectors were +1.5% or better. Shorts got squeezed and who knows how much
of the move involved option expiration or new IRA money, not to mention the
hedge fund program front-running. Look at the SMH 5-minute chart and it is one
big "V" the last two days. The selloff on Thursday was from 37.07 to a 35.96
intraday low and it hit 37.50 yesterday, closing at 37.38. It is just one big
casino and knee-jerk to every announced piece of news..
NYSE volume expanded yesterday to 1.82 billion
shares, volume ratio 87 and breadth +1865, which was certainly accelerated by
the interest-sensitive stocks, which comprise about 35% of all NYSE stocks.
It is business as usual today, except that the
intraday reversal strategies will swing to the short side on continued upside
hype. Stay away from continuation long entries above yesterday’s highs during
the opening period.
Have a good trading day,
Kevin Haggerty